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Idea Of The Week: How to Leverage on Fundsupermart’s Recommended Funds? July 14, 2017
In conjunction with the announcement of FSM Recommended Unit Trust list 2017/18, in this article, we will discuss how investors can leverage on our recommended funds list.
Author : Jerry Lee Chee Yeong


 How to Leverage on Fundsupermart’s Recommended Funds?

FSM Recommended Unit Trusts List 2017/18 was released on 5th of July 2017. The Recommended Unit Trusts List has been the house specialty for Fundsupermart for the past 8 years. In order to ensure our recommendations remain relevant and up-to-date for our investors, FSM’s research team will carry out analysis on the funds’ performance, expense ratio and risk measures on an annual basis to update the list accordingly. This year, 36 unit trusts from various assets classes have illustrated their superior performance against its peers and emerged as the recommended funds for 2017/18.

The Founding Reasons Behind Our Recommended Funds List

We, have been emphasizing in portfolio investing approach, hence, our 36 recommended funds include various assets classes like equity, fixed income and balanced funds. On top of that, there are total of 26 categories of funds which invest into different geographical regions such as Developed Market, Asia ex Japan, Global Emerging Market, Malaysia and so on. We hope this lightens the burden of investors as we have narrowed down the over 400 funds on our platform into 36 funds, which we think are worth highlighting based on our selection criteria and methodology. However, investors must realize that the recommended funds list is not meant to be the be-all and end-all list of funds that suit every investor as each of the investor is unique with different risk tolerance and investment preference. Hence, investors are encouraged to put in effort to do their own study prior investing. Investors can also leverage on our star rating report in conjunction with our recommended fund list, for the decision of their portfolios’ geographical allocation and funds selection.

Decent Performance in Comparison with Peers

From table 1 & 2, we can observe that the FSM recommended equity and balanced funds have consistently outperformed their respective peers for the past 1-year to 3-year periods on a cumulative basis (except for 2014 recommended balanced fund). By looking at the performance of these recommended funds list since 2012, we are proud to say that, for investors who have followed our recommended funds, they would have made an above-average return.

Since fixed income fund is playing the role of portfolio stabiliser within one’s portfolio, one might notice that the performance of our recommended fixed income funds might not be as strong as the peers’ performance. Reason being, our main concern for fixed income funds is the risk measures of the funds instead of the returns. Therefore, we have assigned a higher weightage for risk measures when assessing the fixed income funds. As such, our recommended fixed income funds would have a stronger resilience as compared its peers during market downturn.

Table 1: Performance of FSM Recommended Equity Funds vs Peers

Period
Fund
2012
2013
2014 2015 2016
1 Year RF 19 9 10 -1 18
  Peers 17 8 8 -3 15
2 Year RF 32 18 8 17 -
  Peers 26 16 4 12 -
3 Year RF 39 14 28 - -
  Peers 37 11 19 - -

Source: Bloomberg, iFAST Compilations. Data as of 31 May 2017. Returns in MYR terms with any income or distribution reinvested.

Table 2: Performance of FSM Recommended Balanced Funds vs Peers

Period
Fund
2012
2013
2014 2015 2016
1 Year RF 18 9 2 2 10
  Peers 15 7 2 -1 7
2 Year RF 26 15 1 13 -
  Peers 24 9 1 6 -
3 Year RF 33 16 9 - -
  Peers 28 9 9 - -

Source: Bloomberg, iFAST Compilations. Data as of 31 May 2017. Returns in MYR terms with any income or distribution reinvested.

Table 3: Performance of FSM Recommended Fixed Income Funds vs Peers

Period
Fund
2012
2013
2014 2015 2016
1 Year RF 5 0 7 7 5
  Peers 6 2 4 3 6
2 Year RF 7 6 12 13 -
  Peers 8 7 8 9 -
3 Year RF 14 10 21 - -
  Peers 14 13 14 - -

Source: Bloomberg, iFAST Compilations. Data as of 31 may 2017. Returns in MYR terms with any income or distribution reinvested.

Two Newcomers

In this year recommended funds list, we have introduced two new categories which are the “Single Country Equity” funds for India and Singapore.

India – Single Country Equity: Manulife India Equity Fund

Manulife India Equity Fund is a feeder fund that feeds into Manulife Global Fund – India Equity Fund. In fact, the target fund is managed by an experienced team with an average of 18 years investment experience. On investment strategy front, the fund adopts a bottom-up investment strategy which assess market price of a company’s securities relative to their valuation of the company’s long-term earnings. At this juncture, the fund manager believes that with the improving global economy growth coupled with several positive factors such as improving government revenue and ameliorating income growth, there will be plenty of solid return opportunities on India’s economic front. In term of performance, the fund has managed to consistently outperform the Mumbai Sensex Index and its benchmark, the MSCI India 10/40 Index over the past 3 years in term of annualised return.

Singapore – Single Country Equity: Nikko AM Singapore Dividend Equity Fund

Singapore Dividend Equity Fund is a growth fund that adopts bottom-up fundamental analysis approach. The fund invests primarily in equities listed on the Singapore Exchange. In addition, the fund also has the flexibility to invest in securities listed outside of Singapore, which offer attractive and sustainable dividend.

The fund posted superior performance over the past 3 to 5 years, outperforming its benchmark, the Straits Times. On top of that, the fund also exhibited strong resilience as compared to its benchmark during market downturn, which indicates that the investment team has managed the portfolio downside risk better.

As both of the newcomers are single country funds which embedded with higher risk, hence, we would like to advise investors to include this fund as part of their supplementary portfolios, with not more than 10% allocation of their overall portfolios.

Conclusion:

In conjunction with the announcement of FSM Recommended Unit Trust list 2017/18, we are delighted to inform our investors that Fundsupermart.com is lowering the sales charges on the Recommended Unit trusts to 0.8% from 6th July 2017 till 3 August 2017. All in all, we believe that our recommended fund list would be a good starting guide for investors to build their diversified portfolios.

For more information about the recommended funds, investors can read our Research Team’s commentaries.


This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus, product highlight sheet (PHS), and if necessary, consulting with financial or other professional advisers. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Amongst others, investors should consider the fees and charges involved. The relevant prospectuses have been registered and lodged with the Securities Commission. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should be highlighted of the fact that the value of their investment will remain unchanged after the distribution of the additional units. All applications for unit trusts must be made on the application form accompanying the prospectus. The prospectuses and PHS can be obtained from Fundsupermart.com. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.